Why your Investment Property Could Thrive from a second GFC

Debt, Recession Global Financial Crisis (GFC). These are terms we hear a lot lately. But if you look back at property in times gone by, an economic slump around the world could potentially be a good thing for your investment property.

This is because historically, financial crises have sent investors scurrying to the relative safety of housing, which is nowhere near as volatile as other forms of investment such as shares and the like.

Another trend that tends to occur during such times, where countries find themselves in financial crisis, is that people leave in favour of greener pastures. Therefore, if the situation deteriorates in Europe, as it looks to be doing, Australia might find itself, once again welcoming a new wave of European migration. While the US have commenced printing more money to inflate itself out of debt, the countries in the European Union don’t have this option.  The thousands of disgruntled Spaniards, Irish, Portuguese, Italians and Greeks may seek their fortunes here, in Australia as we are protected from the European economy  because of our reliance on Asia.

This influx of migrants will in turn generate economic growth and the housing market will boom for investors in the areas where they choose to settle –  just as our history shows. Capital cities would be the best affected by this, but they could also find employment and migrate to our regional areas.

Why following the herd is not always the best thing…

Amid the economic uncertainty leading to recent sharemarket falls around the globe, accounting firm Chan and Naylor reminds people that Australia remains the ‘lucky country’ and there are bargains around for savvy investors in both property and stocks.

Australia is well positioned to weather the current economic storm, according to Chan and Naylor, pointing out that China is now the destination of 25 per cent of Australian exports and Australia’s national debt-to-gross domestic product ratio is expected to peak at around 21 per cent, compared to 110 per cent for the Organisation for Economic Co-operation and Development peer group.

Reinforcing Australia’s strong position is the continuing strength of the Australian dollar, as well as the Reserve Bank of Australia’s continuing expectation of a 3.75 per cent to 4.25 per cent recovery by 2012.

“Even if these figures prove optimistic, Australia is still expected to significantly outperform most other industrialised countries due to slower global growth and returns,” said David Hasib, Chan and Naylor partner and head of financial planning. “The stall in growth should take the pressure off interest rate rises locally with the expectation that we may see a rate decrease in the coming months.”

Hasib acknowledged that in the short term there’ll be some investment pain as a result of the recent volatility. But in times like these, he said, investors should remember their longer-term convictions and look for the opportunity therein.

Read more: http://www.apimagazine.com.au/api-online/news/2011/08/why-you-shouldnt-always-follow-the-herd?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+API_Property_News+%28Australian+Property+News%29

How to Snare a Bargain Property

WEAKNESS in the real estate market has reduced property prices, but finding a bargain still requires research and a businesslike approach by investors.

shopping trolley

A low price doesn’t automatically mean it’s a bargain, as other prices in the market may also be lower, but experts say there are several strategies to help buyers get a good deal.

“Keep an eye on properties on the market because generally speaking, the longer a property languishes on the market the keener the vendor is to sell,” says university lecturer, author and property investor Peter Koulizos.

Investors and other buyers should be constantly monitoring the houses they are interested in, he says.

“When you start to see the price fall, that’s an opportunity to get in,” he says. “If they have already succumbed to the fact they have to bring the price down, now it’s just a matter of how far down.”
Read more: http://www.news.com.au/money/how-to-snare-a-bargain-property/story-e6frfmci-1226121248397#ixzz1WIK7NVPT

 

 

 

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